Will Cryptocurrencies Replace Fiat Money in the Future?

Tanui Felix, a technical writer at The Right ICO, answers the question on Quora: Will Cryptocurrencies Replace Fiat Money in the Future?

To begin with, let’s take a brief look at the fiat currency. The US dollar, for instance, is the most widely used currency in the world, but what exactly is it? It is simply a paper printed by the government that made it a legal tender. Nowadays, fiat currencies are not even backed by gold or any other physical commodity; they are merely pegged on the faith placed in it. The purchasing power of fiat currency gets eroded with time. Presently, US dollar is worth less than it was 5 years ago and much less than it was 10 years ago.

The advent of cryptocurrency could be the beginning of a new way to exchange value. This development can easily be associated with how email disrupted the post office. Email broke the post office’s value chain system since it introduced a new order where you could send a letter without a stamp. Similarly, cryptocurrency enables you to send or receive money without an intermediary. This bank-less system will ultimately do away with banks.

According to David Drake, a cryptocurrency magnate and Chairman of LDJ Capital, technology-based disruptive innovation is “sweeping across the business world and challenging the dominance of several traditional organizations”. Cryptocurrency is disrupting the financial system because it has quite a number of advantages over the conventional currency such as the dollar. By eliminating intermediaries, digital currency gives you more control of your finances. Besides, it can be used as a hedge against the inflation of the dollar. Most cryptocurrencies are also extremely secure due to the use of dual-sided cryptography for every transaction. Bill Davis,a public sector Digital Strategist & Design consultant, says cryptocurrencies use hashing to effectively verify the integrity of data by systemically representing a large amount of data as short numbers that cannot be replicated.

Unlike fiat currency, cryptocurrency cannot be debased by any government because it’s not tied to it. Even the governments cracking down on it are actually making it more valuable. Fiat currency can become worthless when a government gets replaced or falls apart. And it goes without saying that no government is immortal.

During an interview, the CEO of ChainTrade– Vincent Jacques, said: “Crypto is the biggest financial opportunity in decades. Anyone from cashiers to Pakistani farmers can participate and change their life drastically. Blockchain may still be in its infancy but the best case scenario is a global financial revolution. Fiat currency is a system that heavily relies on debt, and that system is failing everyone who isn’t a bank. Most crypto projects are still in their early stages of development and still have years before they can prove their uses, but when they do we really could see the largest transfer of wealth in history.”

It seems we’re hesitant to accept that cryptocurrency is quickly becoming a new kind of money. In essence, Bitcoin is already miles ahead of the dollar. Right now it’s worth thousands of times more, yet this is just the beginning. What’s even interesting is the colossal number of people who have never heard of it or those that just chose to ignore it. However, it’s a matter of time before more people jump on the bandwagon.

User-adoption is a legitimate challenge facing cryptos today; nonetheless, all cryptocurrencies are still in their infancy. It’s pretty much like the internet in the 1990’s. During its early days, the internet was only used by nerds. A few years later, it saw rapid acceptance and adoption. Now, we all live on the internet. This is exactly what will happen with cryptocurrencies. So, it’s just a matter of time before the rest of the world catches up with this technology. Jeff Ramson, an entrepreneur, innovator, and CEO of PCG Advisory Group believes cryptocurrency holds a long-term promise owing to their fast, secure and efficient payment system. Ramson says cryptocurrencies’ innovative ideology for a more secure monetary future will be the key driving force behind their adoption as a payment method.

Regardless of how governments or investors feel about the impending switch from conventional currency to digital forms of currency, the wave of change is unrelenting.